The KePub reader uses the default sans-serif font (Avenir) when you specify
font-family:monospace; in the stylesheet. The trick with the ePub reader was to define "monospace" as the name of a monospace font you have installed, but I'm not sure whether that works for the KePub reader. From what you describe it sounds like it doesn't.
In that case you would need to edit the stylesheet in the book to change every instance of
font-family:monospace; to
font-family:"Courier New",monospace; to use your installed Courier New font as the monospace font. If the book uses <pre> tags for code then you'd also need to set
pre {font-family:"Courier New",monospace;} in the stylesheet. That is a lot more work than for ePubs.
Edit: There is also a shorthand form:
font: that some books use instead of
font-family:. That would need to be changed too.
(I read some KePubs synced from the Kobo server, but I always sideload ePubs because the ePub reader does this typographical stuff much better than the KePub reader.)
The font selection menu showing Italics was a change in one of the recent firmware updates.